my findings regarding technical systems. 500 trades is not enough . you need 2000 to 10000 trades to evaluate the system. all that you have to do is to have a statistical advantage. a system that has a profit factor of over 1.3 long term. 2 is way above average and i think it's unsustainable. anything above 2 is a miracle if it can be long lasting. usually systems that have a high profit factor will have a huge sl taken in the future where they will go to 0. 1.6-1.7 profit factor is amazing and i think it can be for the long term. many people have tried to find something that works, something that will work in the future.
my solution for the future will be a universal. that i believe is the best strategy for the long term. i have charts from the 30's dow jones and my systems work there also. that's my supreme test for my systems. i backtested on forex on 15 min or h1 or h4 for an extended period and after that i go to the dailyes1930's dow and 1970's sp and if the systems work there also that means that they are good. by adding two principles sometimes you get better results, fantastic results even. if for instance you have something that works at 60% winrate and you add another filter that is suited for the principle that you are trying to trade it can get you to 65 or even 70 percent winrate. that in terms of profit factor can be the difference between 1.3 and 1.7. a very very big difference.
the principle i discovered for myself is called the contrast principle .in every situation if after a bullish candle comes a bearish candle chances are that the price will go to the downside- close to 60%. the chances are improved also by taking the low of the bearish candle. that's another principle. if you take the break of a the low of a bearish candle or if you take the high of a bullish candle that can be also a statistical advantage. not much but something to work with.
why is it important to have a high profit factor? the thing is that the closer you are to a big profit the farther you are away from a loss.
Tool I use for backtesting , better than forextester. Visual Backtest : https://www.forexfactory.com/showthread.php?t=779303
my solution for the future will be a universal. that i believe is the best strategy for the long term. i have charts from the 30's dow jones and my systems work there also. that's my supreme test for my systems. i backtested on forex on 15 min or h1 or h4 for an extended period and after that i go to the dailyes1930's dow and 1970's sp and if the systems work there also that means that they are good. by adding two principles sometimes you get better results, fantastic results even. if for instance you have something that works at 60% winrate and you add another filter that is suited for the principle that you are trying to trade it can get you to 65 or even 70 percent winrate. that in terms of profit factor can be the difference between 1.3 and 1.7. a very very big difference.
the principle i discovered for myself is called the contrast principle .in every situation if after a bullish candle comes a bearish candle chances are that the price will go to the downside- close to 60%. the chances are improved also by taking the low of the bearish candle. that's another principle. if you take the break of a the low of a bearish candle or if you take the high of a bullish candle that can be also a statistical advantage. not much but something to work with.
why is it important to have a high profit factor? the thing is that the closer you are to a big profit the farther you are away from a loss.
Tool I use for backtesting , better than forextester. Visual Backtest : https://www.forexfactory.com/showthread.php?t=779303
